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Insurance Coverage Depends on Contractual Interpretation of “Reasonable Belief”

On September 25, 2017, the Illinois Appellate Court for the First District reversed summary judgment and rebuffed Founders Insurance Company’s argument that existing Illinois case law allowed it to refuse coverage after a driver with only a learner’s permit collided with another vehicle because a licensed adult was not in the car with him at the time. The Court looked to Founder’s policy of insurance to reverse the trial court.

Founders’ policy stated, inter alia, that the driver will not be covered for “bodily injury or property damage arising out of the use by a person of a vehicle without a reasonable belief that the person is entitled to do so.” Founders Ins. Co. v. Sheik, 2017 IL App (1st) 170176, ¶8. Founders argued that Illinois law requires drivers with a learner’s permit to be accompanied by a licensed adult, 21 years of age or older, who must “occup[y] a seat beside the driver.” Id. (citing 625 ILCS 5/6-107.1(a)(1) (West 2016)). Accordingly, Founders argued, because the licensed driver (the father) was outside the car observing his son (driver with the permit) parallel park at the time of the accident, there could be no reasonable belief that he was entitled to drive. Id.

Rather than create a draconian bright line rule, the Appellate Court rightfully opted to analyze the insurance provision under a reasonable person standard. Id. at ¶19 (relying on Founders Insurance Co. v. Munoz, 237 Ill. 2d 424, 437 (2010)). The Court found, “both [son] and [father] believed [son] was properly using his permit to practice parallel parking because [father] was directly supervising him. The standard, as articulated by our supreme court in Munoz, is what the ‘average, ordinary, normal, reasonable person for whom these policies were written’ would believe. (Internal quotation marks omitted.) Munoz, 237 Ill. 2d at 437. A factfinder could determine that [son], a valid permit-holder, reasonably believed he was allowed to practice parallel parking while his father supervised him from outside the vehicle. Id. at ¶20. Thus, the Court reversed the trial court’s decision and remanded the case so that a fact finder could resolve this question.

The full opinion can be found at:

— Ryan M. Griffin